UPDATE 2-Delhaize picks former Metro stalwart as chief executive

Wed Sep 4, 2013 5:27am EDT

* Frans Muller, 53, left Metro in March after 16 years

* Delhaize Americas CEO Roland Smith resigns

* Delhaize turnaround plan for U.S. business bearing fruit

* Shares fall over 7 percent on uncertainty about U.S. unit (Adds details, background)

By Robert-Jan Bartunek

BRUSSELS, Sept 4 (Reuters) - Belgian grocer Delhaize has appointed the former head of German retailer Metro's main Cash & Carry business, Frans Muller, as its new chief executive to extend the turnaround strategy of long-serving boss Olivier Beckers.

Delhaize, which makes about two-third of its revenues in the United States, also announced on Wednesday that Roland Smith was resigning from his role as boss of Delhaize America and the unit would report directly to the CEO in future.

The company, with about 3,400 stores worldwide, has been looking for a new chief executive since Beckers said in May he was stepping down after 14 years at the company.

Muller, initially a rising star at Metro, left the German firm in March after a disappointing performance by the wholesale unit he had led for five years prompted a surprise dividend cut and profit warning.

Delhaize shares have risen more than 50 percent this year as Beckers' overhaul of U.S. operations has started to show results, while Metro stock has gained about 30 percent.

But Delhaize shares still trade at a 17 percent discount to peers, including Metro, and were down 7.2 percent at 0840 GMT within a European retail index down 0.7 percent.

"Muller is a good choice. He has a lot of experience in the business," said ING analyst Marco Gulpers.

"Today's share reaction reflects the fear that there is more uncertainty about the performance of the U.S. unit, now that Roland Smith has left."

Beckers said the U.S. business was continuing to deliver good results. "We have a solid foundation upon which to build. There is a strong leadership team in place and we look forward to further progress," he said in a statement.

Muller, who has no experience in North America although he was responsible for 740 Metro stores in 29 countries and sales of 31.6 billion euros ($41.6 billion), will join Delhaize on Oct. 14 and take on his new role on Nov. 8.

A 52-year-old Dutch national who studied business economics in Rotterdam, Muller joined Metro in 1997 at its Dutch cash and carry business and later had responsibility for Asia Pacific, Russia and Ukraine before joining the board in 2006.

STRUGGLING CASH & CARRY

Metro's cash and carry business, which accounts for almost half of group sales, has been hit hard by the impact of economic weakness on its core customers in the independent retail and hospitality industries and responded by cutting prices.

As the business struggled, Muller saw his responsibilities curtailed between 2010 and 2011, when the Europe, Middle East and North Africa region was temporarily handed to Joel Saveuse.

Delhaize said Beckers would remain as an adviser to Muller until the end of the year and stay with the company as a non-executive director after that.

Beckers struck his biggest deal at Delhaize within months of taking charge, buying upmarket U.S. chain Hannaford for $3.6 billion to cement the company's position as a force in food retailing along the country's east coast.

But Delhaize's strength in the United States, which accounted for about 65 percent of its 2012 revenues of 22.7 billion euros, has been a mixed blessing, due to a squeeze on U.S. consumer incomes and cut-throat competition.

That has led Beckers to cut costs and spearhead a major refurbishment programme at its largest U.S. chain, Food Lion, a strategy that has started to pay off with Delhaize posting a strong second-quarter profit and raising its full-year forecast last month.

($1 = 0.7601 euros) (Writing by Emma Thomasson, additional reporting by Matthias Inverardi in Duesseldorf; Editing by David Cowell and Mark Potter)

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.